"No man is above the law and no man is below it: nor do we ask any man's permission when we ask him to obey it." T.R.
Representing the voice of little people.

Wednesday, July 23, 2014

4 Defrauded Bank of America of More Than $500,000 by “Flipping” Property

An indictment was unsealed earlier today charging individuals with
bank fraud and conspiracy arising from a scheme to take advantage of
plans by an all-girls high school in Hempstead, New York, to expand its
campus and build an athletic field for students.
The defendants, two couples, including a real estate attorney and the
officer of a real property corporation, were arrested earlier today by
special agents of the Federal Bureau of Investigation and will be
arraigned this afternoon before United States Magistrate Judge William
D. Wall at the United States Courthouse in Central Islip, New York. If
convicted, each defendant faces up to 30 years of imprisonment, fines,
and the forfeiture of $539,000 in allegedly illegal profits arising from
the scheme.
The charges and arrests were announced by Loretta E. Lynch, United
States Attorney for the Eastern District of New York, and George
Venizelos, Assistant Director-in-Charge, Federal Bureau of
Investigation, New York Field Office (FBI).
As set forth in the indictment, defendants Sofia Atias, Joseph Atias,
and Nicholas Pellegrini conspired to defraud Bank of America of over
half a million dollars by fraudulently avoiding foreclosure on a home
through a fraudulent “short sale” of the property to a straw buyer —
defendant and co-conspirator Paula Berckhoff, also known as “Paula
Pellegrini” — and then profiting from the home’s re-sale or “flip” to
Sacred Heart Academy, a Catholic all-girls high school that paid the
conspirators almost $1 million for the property to accomplish
long-sought plans to improve and expand its facilities.
Early in 2011, defendant Sophia Atias had defaulted on some $750,000
in a mortgage and home equity loan secured by a home she owned at 83
Cathedral Avenue, Hempstead, New York, which sat adjacent to the high
school. As Bank of America began foreclosure proceedings, defendants
Sophia Atias, Joseph Atias, and Nicholas Pellegrini, acting as the
couple’s attorney, negotiated with representatives of Sacred Heart
Academy and ultimately won a commitment from the school to buy the
property for $925,000 — an amount that would have been enough to repay
the Atias’ debts to the bank.
Instead, the defendants allegedly conspired to induce Bank of America
to agree to a short sale of the Cathedral Avenue property. Short sales
are an alternative to lengthier and often costly foreclosure
proceedings. In a short sale, a bank agrees to accept whatever price a
defaulting borrower can get on the immediate or short sale of a property
in foreclosure. As the bank did here, lenders may also release the
borrower from any obligation to repay any remaining balances owed on the
original mortgage or loans.
Knowing that Sacred Heart Academy had already agreed to buy the
Cathedral Avenue home for $925,000, the defendants nonetheless induced
Bank of America to agree to a short sale of the house for only $480,000
to Jefferson Real Property Corporation, whose secretary and treasurer
was defendant Nicholas Pellegrini’ s wife. As part of their agreement
with the bank, Mrs. Pellegrini, using the name Paula Berckhoff, and Mrs.
Atias, both falsely represented that neither would receive any
undisclosed proceeds from the transaction and further claimed that the
short sale was not an attempt to “flip” or use “straw buying” to avoid
repayment of Atias’ debt.
In fact, as charged in the indictment, several months after the
fraudulent short sale, the Atiases and Pellegrinis did re-sell or “flip”
the Cathedral Avenue home to Sacred Heart Academy for the previously
agreed price of $925,000. Given the fraudulent inducement to accept the
short sale, Bank of America was defrauded of almost $540,000.
“Through a web of lies and false documents, the defendants took
advantage of a school’s desires to improve its students’ athletic
facilities, lied to win concessions from a bank, and then lied again by
‘flipping’ the property and defrauding the bank of over half a million
dollars. This is not a case about tough bargaining. This is fraud, pure
and simple,” stated United States Attorney Lynch.
FBI Assistant Director-in-Charge Venizelos stated, “As alleged in the
indictment, while the defendants did not brandish a weapon, they stole
over half a million dollars from Bank of America based upon their false
misrepresentations and filing of false documents with the victim-lender.
Bank fraud burdens lenders with bad loans and weakens our financial
markets. Individuals who engage in this criminal activity should be
reminded that they will be vigorously investigated and held
accountable.”